Topical items and views on the impact of digitisation on publishing and its content and the issues that make the news. This blog follows the report 'Brave New World',
(http://www.ewidgetsonline.com/vcil/bravenewworld.html ), published by the Booksellers Association of the UK and Ireland and authored by Martyn Daniels. The views and comments expressed are those of the author.

Sunday, December 01, 2013

eBooks and the Law, the Taxman, the EU and the French

Taxation and the law are often used to steer communities
into a certain culture and direction. Sometimes they respond to changing values
and aspirations, in other the aim to act as a catalyst to change and in some it
is to pursue blind dogma.

We have seen aggressive tax efficiency programmes by many
large corporations exploit the low tax rates of some EU member states to the
clear detriment of others. We have seen huge subsidies being lavished on the
likes of Amazon by UK authorities in order to build warehouse in areas of high
unemployment, or to stimulate local communities. These are nothing short of
today’s ransom notes forcing the public purse that they shun from contributing
to, to be spent on them.

But the question remains; how should legislation and taxation
respond to change or stimulate it?

We then have the potential EU harmonisation of VAT on ebooks
which is planned for January 2015 along with the change of taxation from the
point of dispatch to the point of consumption. Both are is long overdue, but whereas
the allocation of VAT at consumption may be easy the harmonisation of the rate
is dependent on all agreeing to act as one – a real challenge when some want
the current situation to continue as is and others are already defying the
rules and going their own way. Irrespective, we must first define an ebook and establish
when an online service on subscription is an online service or an ebook service.
Also as more embrace epub3 and move towards multimedia dno ebooks still remain
an ebook irrespective of their content being potentially also audio, music,
video, games and information streamed services?

The French are infamous for their proactive approaches on
such matters. The government of President François Hollande has introduced a
70% tax band for high earners which may have gone down well on the left bank,
but has also gone down well in neighbouring states and cities such as London,
where property prices have been increasing, due in part to the invasion of
French high earners wishing to avoid the new levy. Perhaps it was the French government’s
way of reintroducing the revolution, but this time, minus the guillotine?

The French have also responded to Luxembourg’s low VAT rate
on ebooks by cutting theirs at a time when they were told it was against EU
rules, which as a leading EU player, they continue to break today.

French deputy Isabelle Attard came up with the weirdest
of proposals to introduce a higher the rate of VAT on ebooks that have DRM. The
logic was that it would stimulate an open market but the reality it was clearly
aimed at penalising those ‘walled gardens’ of Amazon, Apple, Kobo etc.

Some would suggest that It was a stupid and ill thought out
proposal. As we have written before encrypted DRM is not the answer, but also leaping
to a DRM free market without due consideration is an ill thought out recipe for
disaster. Whoever the consultants, advisors and lobbyists were that influenced
the thinking they lack the common sense to see past the next step. Rather than
opening up a legitimate second hand market they destroy the potential to resell
and to create a soft authoritative ownership watermark. Did the removal of DRM
in music destroy iTunes, or really change the market domination of the handful
of players who share the same market, albeit minus DRM today?

We now read that the amendment to raise the DRM restricted ebooks
to 19.5% VAT has thankfully been defeated.

However, the
French have passed French lawmakers voted last week to pass a law that prohibits
online booksellers from offering free delivery to customers on top of the maximum
5% discount on books. It would be great if the French Booksellers were to
respond to all this central help, but they have hidden behind fixed pricing and
done little to respond to change. It’s rather sad that the French lawmakers
remain somewhat adrift of today’s market reality not knowing who they serve
best; the author, publisher, bookshop consumer or from some points of view,
none of them.

The problem is that we all want change and the digital
marketplace to evolve locally and to enable future opportunities to be able to
be exploited. The question is who makes that happen in a global and complex
marketlace?

1 comment:

About Me

Before entering publishing I worked for many years as a Senior Executive in blue chip organisations in the retail, oil and automotive sectors. My publishing induction was initially as Director of Strategic Development at VISTA. There I was responsible for, and a contributor to, their highly acclaimed ‘Publishing in the 21st Century’ research series, the primary creator behind publishing services PubEasy and ‘batch.co.uk’, the initiator of the development of new Front Office systems to support publishers. In 2006 I joined Value Chain International(VCIL) initially as VP Marketing, Media and Publishing before becoming their President in 2009. In July 2011 the company's operations were acquired by Syncordia. I hold two non executive positions with publishing industry players Bibliophile Ltd and Haven Group and currently setting up Read Petite a service focused on providing digital short form material online via subscription.
Email mdaniels@opus57.co.uk